Thursday, January 20, 2011

Foreign Aid in Nepal–Donors & Amount

Foreign Aid in Nepal (total, million, current US$)

BA, OA, and ODA

1960-2008

1992-1999

2000-2008

Net bilateral flows

7582

2002

3116

Net ODA and Official Aid received

11732

3205

4289

Net ODA per capita (current US$)

561

147

160

GDP

159823

34859

70847

Net bilateral flows (% of GDP)

4.74

5.74

4.40

Net ODA (% of GDP)

7.34

9.19

6.05

Top bilateral donors (1960-2008):

  • Japan has been the largest bilateral donor so far (1960-2008): US$ 2059 million
  • Followed by the UK (1960-2008): US$ 1033 million
  • Followed by Germany and the US (1960-2008): US$ 974 million and US$ 940 million
  • Other top donors are European nations; the Scandinavian countries are very generous
  • In this decade (2000-2008), top donors have jacked up bilateral assistance.

Average annual bilateral flows have been increasing. On average (annual), it was US$ 346 million between 2000 and 2008. The average annual net ODA flows during the same period was US$ 477 million.

Net ODA per capita (current US$) has been US$ 561 between 1960 and 2008, and US$ 147 over 1992-1999, and US$ 160 over 2000-2008.

  • Net bilateral flows between 1990 and 2008 have been 4.74 % of GDP.
  • Net bilateral flows between 2000 and 2008 have been 4.40 % of GDP.
  • Net ODA between 2000 and 2008 have been 6.05 % of GDP.

Question: What has been the impact of this much of assistance so far on economic growth, enhancement of livelihoods, industrial development, poverty reduction, health, education, migration, conflict, governance, inclusion, and the slew sectors with development interventions? My earlier views on donors’ development strategy paper here, and a critical look at the aid industry in Nepal here. Fyi, the data is sourced from WDI website.

UNTCAD’s forecast: Developing countries to expand faster than developed countries in 2011 & 2012

The UN forecasts that the world economy will expand by 3.1 percent in 2011 and 3.5 percent in 2012 – far from sufficient to enable recovering the jobs lost because of the crisis. Consistent with other projections, UNTCAD notes that developing countries will continue to drive the global recovery. Their output growth will moderate to 6.0 percent during 2011-2012, down from 7.0 percent in 2010, because of the slowdown in the advanced countries and phasing out of stimulus measures. Developing Asia, led by China and India, continues to show the strongest growth performance, but some moderation (to around 7 percent) is expected in 2011 and 2012.

The recovery may suffer further setbacks if some of the downside risks materialize, in which case a double-dip recession is looming for Europe, Japan and the United States. WESP 2011 argues that in the short run more fiscal stimulus will be needed to reinvigorate the recovery, but that it will need to be better coordinated with monetary policies and reoriented to provide stronger support to employment generation and facilitate a sustainable rebalancing of the global economy. This cannot be done without better international policy coordination.

The recently released WB’s forecast is a bit optimistic than the UNCTAD’s forecasts in World Economic Situation and Prospects 2011 (WESP). But, both reports have the same forecasts for developing countries as a whole. According to the WB’s latest Global Economic Prospects 2011, global GDP (measured at 2005 market prices and exchange rates), which expanded by 3.9% in 2010, will slow to 3.3% in 2011, before it reaches 3.6% in 2012. Developing countries are expected to grow 7% in 2010, 6% in 2011 and 6.1% in 2012. They will continue to outstrip growth in high-income countries, which is projected at 2.8% in 2010, 2.4% in 2011 and 2.7% in 2012. The WB’s report notes that strong developing country domestic demand is leading the world economy but persistent financial sector problems in some high-income countries might threaten growth.

Here is UNTCAD’s forecasts:

Annual percentage change

Growth of world output, 2006–2012

 

Change from United
Nations forecast of
June 20 10c

 

2006

2007

2008

2009

2010a

2011b

2012b

2010

2011

World outputd

4.0

3.9

1.6

-2.0

3.6

3.1

3.5

0.6

-0.1

of which:

 

 

 

 

 

 

 

 

 

Developed economies

2.8

2.5

0.1

-3.5

2.3

1.9

2.3

0.4

-0.2

Euro zone

3.0

2.8

0.5

-4.1

1.6

1.3

1.7

0.7

-0.2

Japan

2.0

2.4

-1.2

-5.2

2.7

1.1

1.4

1.4

-0.2

United Kingdom

2.8

2.7

-0.1

-4.9

1.8

2.1

2.6

0.7

-0.2

United States

2.7

1.9

0.0

-2.6

2.6

2.2

2.8

-0.3

-0.3

Economies in transition

8.3

8.6

5.2

-6.7

3.8

4.0

4.2

-0.1

0.6

Russian Federation

8.2

8.5

5.2

-7.9

3.9

3.7

3.9

-0.4

0.7

Developing economies

7.3

7.6

5.4

2.4

7.1

6.0

6.1

1.2

0.2

Africa

5.9

6.1

5.0

2.3

4.7

5.0

5.1

0.0

-0.3

Nigeria

6.2

7.0

6.0

7.0

7.1

6.5

5.8

0.6

-0.5

South Africa

5.6

5.5

3.7

-1.8

2.6

3.2

3.2

-0.1

-0.3

East and South Asia

8.6

9.3

6.2

5.1

8.4

7.1

7.3

1.3

0.2

China

11.6

13.0

9.6

9.1

10.1

8.9

9.0

0.9

0.1

India

9.6

9.4

7.5

6.7

8.4

8.2

8.4

0.5

0.1

Western Asia

6.1

5.1

4.4

-1.0

5.5

4.7

4.4

1.3

0.6

Israel

5.7

5.4

4.2

0.8

4.0

3.5

3.0

1.1

0.4

Turkey

6.9

4.7

0.7

-4.7

7.4

4.6

5.0

3.9

1.3

Latin America and the Caribbean

5.6

5.6

4.0

-2.1

5.6

4.1

4.3

1.6

0.2

Brazil

4.0

6.1

5.1

-0.2

7.6

4.5

5.2

1.8

-1.1

Mexico

4.9

3.3

1.5

-6.5

5.0

3.4

3.5

1.5

0.6

of which:

 

 

 

 

 

 

 

 

 

Least developed countries

7.6

8.1

6.7

4.0

5.2

5.5

5.7

-0.4

-0.1

Memorandum items:

World tradee

9.3

7.2

2.7

-11.4

10.5

6.6

6.5

..

..

World output growth with PPP-based weights

5.1

5.2

2.7

-0.8

4.5

4.0

4.4

0.6

0.0

  • Source: UN/DESA.
  • a Partly estimated.
  • b Forecasts, based in part on Project LINK and baseline projections of the United Nations World Economic Forecasting Model.
  • c See World economic situation and prospects as of mid-2010 (E/2010/73), available from http://www.un.org/esa/policy/wess/wesp2010files/ wesp1 0update.pdf.
  • d Calculated as a weighted average of individual country growth rates of gross domestic product (GDP), where weights are based on GDP in 2005 prices and exchange rates.
  • e Includes trade in goods and non-factor services. Previous WESP reports reported growth of merchandise trade only.

The report notes that between 2007 and the end of 2009, at least 30 million jobs were lost worldwide as a result of the global financial crisis. As more governments embark on fiscal austerity, the prospects for a fast recovery of employment look even gloomier. Worldwide, unemployment and underemployment rates are very high among young people (aged 15 to 24). At the end of 2009, with an estimated 81 million unemployed young people, the global youth unemployment rate stood at 13.0 percent -- a 0.9 percentage point increase from 2008. The global economy still needs to create at least another 22 million new jobs in order to return to the pre-crisis level of global employment. At the current speed of the recovery, this would take at least five years to achieve.

Five challenges for sustainable recovery:

  • Provide additional fiscal stimulus, by using the ample fiscal space that, according to WESP 2011, is still available in many countries.
  • Redesign fiscal stimulus and other economic policies to lend a stronger orientation towards measures that directly support job growth, reduce income inequality and strengthen sustainable production capacity on the supply side.
  • Find greater synergy between fiscal and monetary stimulus, while counteracting damaging international spillover effects in the form of increased currency tensions and volatile short-term capital flows.
  • Ensure that sufficient and stable development finance is made available for developing countries with limited fiscal space and large developmental deficits, including resources for achieving the Millennium Development Goals and investing in sustainable and resilient growth.
  • Find ways to come to credible and effective policy coordination among major economies.